JZ Capital Ptnrs Ltd Q1 2019 Interim Management Statement
June 28 2019 - 2:00AM
UK Regulatory
TIDMJZCP TIDMJZCN TIDMJZCC
JZ CAPITAL PARTNERS LIMITED
(a closed-end investment company incorporated with limited liability under the
laws of Guernsey with registered number 48761)
Q1 2019 Interim Management Statement
28 June 2019
LEI: 549300TZCK08Q16HHU44
(Classified Regulated Information, under DTR 6 Annex 1 section 1.1)
JZ Capital Partners Limited (LSE: JZCP.L, the "Company" or "JZCP"), the London
listed fund that selectively invests in US and European micro-cap companies and
US real estate, today releases its Interim Management Statement for the period
1 March 2019 to 31 May 2019.
Results Highlights
* Net Asset Value ("NAV") of $800.2 million (28/02/19: $810.3 million)
* NAV per share of $9.92, a decrease of 1.2% for the quarter (28/02/19:
$10.04)
* $53.1 million realized, including:
+ $23.3 million from the sale of Waterline Renewal
+ $14.0 million from the refinancing of Felix Storch
+ $14.1 million from JZI Fund III, L.P., related to the sale of portfolio
company Petrocorner and refinancing of Collingwood and Fincontinuo
* $25.6 million invested, including:
+ $2.4 million in Exer Urgent Care
+ $21.4 million in follow-on real estate investments in our assemblages
in Brooklyn, New York, and South Florida
* At the end of the period, the portfolio consisted of 41 micro-cap
investments across nine industries and five major real estate "assemblages"
located in New York and South Florida
David Zalaznick, Founder and Investment Advisor of JZCP said: "The period was
characterized by a series of successful realizations as part of our continued
commitment to using proceeds to make distributions to shareholders and pay down
debt. As part of that, we are delighted to have received shareholder support
for a series of tender offers, the first $30 million of which we intend to
launch in July. We believe these strategic initiatives will greatly benefit all
shareholders and provide the Company with more flexibility as the balance sheet
strengthens."
Net Asset Value
NAV per share for the quarter decreased from $10.04 to $9.92, or 1.2%.
NAV Returns
Net Asset Value per Ordinary Share as of 1 March 2019 $10.04
Change in NAV per share due to capital gains and income received / accrued
on investments
US Micro-cap 0.13
European Micro-cap (0.12)
Real Estate (0.04)
Other changes in NAV per share
Finance Costs (0.07)
Foreign Exchange Effect 0.06
Expenses and Taxation (0.08)
Net Asset Value per Ordinary Share as of 31 May 2019. $9.92
The US micro-cap portfolio had a net increase of 13 cents, primarily due to
write-ups at our co-investment Orizon (6 cents), net accrued income of 6 cents
and escrows of 2 cents. These increases were offset by a write-down at our
Water vertical (1 cent).
The European micro-cap portfolio had a net decrease of 12 cents, primarily due
to write-ups at multiple JZI Fund III, L.P. portfolio companies (3 cents) and 1
cent of accrued income, offset by a 16 cent write-down of the accrued interest
on JZCP's loan to Ombuds.
The real estate portfolio had a decrease of 4 cents for the quarter, due to
carrying costs and pre-development expenses at the property level.
The chart below summarizes the cumulative total NAV returns and total
shareholder returns for the most recent three-month, twelve-month, three-year
and five-year period.
31/05/19 28/02/19 31/05/18 31/05/16 31/05/14
Share price (in GBP) GBP4.79 GBP4.35 GBP4.64 GBP3.90 GBP4.41
NAV per share (in USD) $9.92 $10.04 $9.78 $10.32 $10.08
NAV to market price 39.1% 42.4% 36.9% 45.0% 26.6%
discount
3 month 12 month 3 year 5 year
return return return return
Dividends paid (in USD) - - - $0.16 $0.79
Total Shareholders' return - 10.1% 3.2% 25.9% 23.0%
(GBP)1
Total NAV return per share - (1.2)% 1.4% (2.4)% 6.4%
(USD)1
Total Adjusted NAV return - (1.2)% (0.1)% (4.0)% 15.4%
per share (USD)1/2
______________
1. Total returns are cumulative and assume that dividends were reinvested
2. Adjusted NAV returns reflect the return per share before (i) the dilution
resulting from the issue of 18,888,909 ordinary shares at a discount to NAV
on 30 September 2015 and (ii) subsequent appreciation of the buyback of
ordinary shares at a discount
RECENT ACTIVITIES
Upcoming Tender Offer
JZCP's board has received shareholder approval to return approximately $100
million in capital to shareholders via a series of tender offers at a price no
more than a 5% discount to NAV.
We expect to send out documents regarding the first tender offer of
approximately $30 million in July 2019.
Significant Investments and Realizations
Co-investments
In March 2019, JZCP invested approximately $2.4 million in Exer Urgent Care,
one of the largest urgent care operators in Greater-Los Angeles and Orange
County, California.
Real Estate Investments
In the three-month period ended 31 May 2019, JZCP invested a total of $21.4
million in follow-on investments in our assemblages in Brooklyn, New York, and
South Florida.
Realizations
Waterline Renewal
In April 2019, Waterline Renewal was acquired by Behrman Capital, a private
equity investment firm based in New York and San Francisco.
Waterline Renewal is a leading provider of engineered products used in the
trenchless rehabilitation of wastewater infrastructure for municipal,
commercial, industrial, and residential applications. The company's patented
line of products and technologies allows its customers to deliver long-lasting
solutions that repair sewer systems and wastewater lines without the need for
excavation or property damage, and prevent overflow created by excess inflow
and infiltration of ground water into the wastewater system.
JZCP expects to realize approximately $24.6 million in gross proceeds
(including escrows) from the sale.
Felix Storch
In March 2019, JZCP refinanced Felix Storch, its manufacturer of small and
custom refrigeration appliances. This refinancing resulted in gross proceeds to
JZCP of approximately $14.0 million, which returned JZCP's entire March 2017
investment in Felix Storch of $12.0 million. Felix Storch has continued to
exhibit strong growth and we expect it to return more capital in the future.
PORTFOLIO SUMMARY
At 31 May 2019, the Company's portfolio consisted of 41 micro-cap investments
across nine major industries and five major real estate "assemblages" located
in New York and South Florida.
($'000)
At 31/05/19 At 28/02/19 % Gross Assets
31/05/19
US Micro-cap Portfolio 453,706 478,970 40.9%
European Micro-cap Portfolio 102,176 128,698 9.2%
Real Estate Portfolio 461,495 443,044 41.6%
Other Portfolio
19,520 19,082 1.8%
Total Private Investments 1,036,897 1,069,794 93.5%
Cash and Liquid Investments 73,174 54,308 6.5%
Total Investments (and Cash) 1,110,071 1,124,102 100.0%
Other Current Assets 563 506 0.0%
Total Investments (and Cash) 1,110,634 1,124,608 100.0%
At 31 May 2019, 6.5% of gross assets were invested in liquid assets (cash). The
remaining portion of the portfolio was invested in private investments in US or
European micro-cap companies or real estate. Our micro-cap investments are
valued at fair value by JZCP's directors each quarter whereas our real estate
portfolio is valued at least annually and based upon third-party appraisals,
generally done prior to JZCP's fiscal year end.
We value our privately held businesses cautiously. Our average multiple used
for our US micro-cap businesses is 8.1x trailing EBITDA. In addition, we do
not have substantial debt in these businesses. The multiple of debt senior to
JZCP's position is approximately 3.8x EBITDA.
Top Ten Investments
Our ten largest investments as of 31 May 2019 are summarized below:
($000's) Asset Valuation % Gross
Category 31/05/19 Assets
31/05/19
Industrial Services Solutions US 95,893 8.6%
Vertical
Design District - Southern Parcel Real Estate 91,994 8.3%
Greenpoint Real Estate 59,768 5.4%
Fulton Mall Assemblage Real Estate 53,226 4.8%
TierPoint US 46,813 4.2%
Deflecto US 42,401 3.8%
Avante US 40,850 3.7%
Williamsburg Retail - North 6th Real Estate 37,188 3.3%
Redbridge Bedford Real Estate 32,372 2.9%
Peaceable Street Capital US 27,634 2.5%
Top Ten Investments 528,139 47.6%
Remaining Assets 582,495 52.4%
Gross Assets 1,110,634 100.0%
Balance Sheet
Below is a summary of JZCP's balance sheet as of the relevant dates:
($000's) 31/05/19 28/02/19
Cash and cash equivalents 73,174 54,308
Investments & other assets 1,037,460 1,070,300
(-) Other net liabilities (249,186) (250,508)
(-) ZDPs due 2022 (61,266) (63,838)
Net Asset Value 800,182 810,262
At 31 May 2019, "other net liabilities" includes $51.4 million from the
issuance of Convertible Unsecured Loan Stock ("CULS") in July 2014, which
carries an interest rate of 6%, and $149.3 million from a six-year term loan
with Guggenheim Partners, which carries an interest rate of LIBOR plus 5.75%.
For Further Information:
Ed Berry / Kit Dunford +44 (0) 20 3727 1046 / 1143
FTI Consulting
David Zalaznick +1 212 485 9410
Jordan/Zalaznick Advisers, Inc.
Sam Walden +44 (0) 1481 745385
JZ Capital Partners Limited
About JZCP
JZ Capital Partners ("JZCP") is one of the oldest closed-end investment
companies listed on the London Stock Exchange. It seeks to provide shareholders
with a return by investing selectively in US and European micro-cap companies
and US real estate. JZCP receives investment advice from Jordan/Zalaznick
Advisers, Inc. ("JZAI") which is led by David Zalaznick and Jay Jordan. They
have worked together for more than 35 years and are supported by teams of
investment professionals in New York, Chicago, London and Madrid. JZAI's
experts work with the existing management of micro-cap companies to help build
better businesses, create value and deliver strong returns for investors. For
more information please visit www.jzcp.com.
END
(END) Dow Jones Newswires
June 28, 2019 02:00 ET (06:00 GMT)
Jz Capital Partners (LSE:JZCP)
Historical Stock Chart
From May 2024 to Jun 2024
Jz Capital Partners (LSE:JZCP)
Historical Stock Chart
From Jun 2023 to Jun 2024
